Business & Management Studies

Abstract

The objective of this research is to determine and measure the effectiveness, the efficiency, the social costs, and the social benefits of our new modern and “progressive” public policies (monetary and fiscal). By using different policy rules, correlation, causality, and a VAR model, we test the effectiveness and efficiency of monetary and fiscal policies by testing the effects of policy instruments (i_FF, MB, M^S, T and G) on the objective variables, prices (CPI), unemployment (u), growth of GDP (RGDP), stock market (DJIA), long-term interest rate (i_10YTB), and trade account (TA). A stationarity and co-integration test for our series is used, too. The empirical results show that the most of the public policy tools do not have a significant effect on the objective variables. The benefits, lately, are insignificant and the social cost enormous and the reason might be the incompetence, the corruption or the control of the policy makers. They must know what the true objective of their policy is, but they cannot satisfy it, which is the maximization of the social welfare, the wellbeing in every sector in the lives of the citizens of the country. There is a need to fix all these dysfunctional institutions and improve our democratic system. What their new liberal public policies have caused to people is just uncertainty, an enormous social cost, and pessimism for the future. After the 2024 elections and the new President in the U.S., some people have started to become more optimistic. We must go back to our traditional policies and to our 3,000 years old value system, civilization, culture, faith, and education. Public policies must prevent crises and satisfy the current, the future, and eternal needs of humans (persons), our citizens.